Debt Settlement

At The Los Angeles Bankruptcy Firm, we analyze your situation and provide you with honest professional advice regarding the best options available to you, whether they include filing for Chapter 7, Chapter 11, or Chapter 13 or an alternative to bankruptcy, such as debt settlement.

What is Debt Settlement?

Debt settlement generally involves approaching a creditor and negotiating a lower principal balance. Creditors are sometimes amenable to such a settlement when the alternative is a bankruptcy, where they may get nothing. However, a debt settlement generally requires you to pay off the negotiated amount in one lump sum payment when the deal is negotiated.

Why Bankruptcy is Better

Debt settlement most often requires you to pay off the debt in one lump sum.  While this sum may be a negotiated figure which is less than the original debt, it may still be beyond your means to come up with a large lump sum payment.  If you cannot comfortably come up with this cash, debt settlement may not be the right option for you. Additionally, you may have to pay tax on the amount of debt that is reduced.

If you are having trouble with multiple creditors, the debt settlement route requires you to negotiate with each creditor individually. One unreasonable creditor can ruin your entire debt settlement plan. And while you are negotiating with one creditor, harassment may continue from the others.  Bankruptcy has the advantage of collecting all the creditors together in one place and forcing them all to follow one court-supervised plan.  Also, the automatic stay puts an end to all debt collection efforts by all creditors the moment they are notified you have filed for bankruptcy.  Bankruptcy can therefore be a more orderly process with a greater guarantee of a successful outcome overall.

Seek Professional Advice for the Right Solution

At The Los Angeles Bankruptcy Firm, we will examine all the options and help you find the solution that is right for you.  Contact The Los Angeles Bankruptcy Firm today for a free consultation and quality representation at cost-effective rates.